Relevance of writ jurisdiction in tax matters

President’s Counsel Dr. K. Kanag-Isvaran, delivering the keynote at the KPMG forum on ‘Strategic overview of the Tax Disputes Resolution’ at the Movenpick Hotel, spoke in detail on writ jurisdiction of the Court of Appeal, and shed light on the process.

Dr. Kanag-Isvaran said, “Earlier when dealing with section 137 of the new Act – I mentioned in passing whether the language of section 137 sub-section (a) amounted to an ouster of the Writ jurisdiction of the Court of Appeal, granted to it under Article 140 of the Constitution. Section 137 reads “no decision relating to the payment of a tax under this Act shall be disputed at the Tax Appeals Commission, in any Court or Tribunal or any other proceedings on any other ground:”except as provided under Chapter XIII of the new Act.“Without burdening yourselves with too much legalese I will opine that there is no ouster.To explain that I will give you some idea of the nature of Writ proceedings.

Dr. K. Kanag-Isvaran PC

“Article 140 of the Constitution provides “…the Court of Appeal shall have full power and Authority…to…grant and issue…writs of certiorari, prohibition, precedendo, mandamus and quo warranto against the judge of any Court of First Instance or tribunal or other institution orany other person”,” he said.

Dr. Kanag-Isvaran said that the writ jurisdiction of the Court of Appeal, under our law, is a statutory jurisdiction and judicial pronouncements have declared it to be an extra ordinary jurisdiction as opposed to its ordinary jurisdiction.

The mechanism provided by a statute for appealing decisions made under its provisions to a higher court are described as the ordinary appellate jurisdiction of such higher court eg., the Court of Appeal, as opposed to its extra ordinary jurisdiction where conferred.

It is a cardinal principle that save in exceptional circumstances the writ jurisdiction of the Court of Appeal cannot be invoked where an alternative statutory remedy ( eg., appeal ) is available to challenge the impugned decision of a lower court or tribunal. Halwan and others v Kaleelu I Rahuman (2000) 3 SLR 50. However, even where an alternative remedy is available, if it can be demonstrated to court that:

l the decision is arbitrary and without the sanction of the law, or the authority has assumed a jurisdiction it does not possess, or

l if the quick and more effective remedy provided by writ proceedings were not allowed to be invoked, great hardship would be occasioned to the party invoking the writ jurisdiction, then, the Court of Appeal will exercise its writ jurisdiction. All these propositions are supported by authorities. This is a commendable entrenchment in our Constitution of one of the most important declarations of the Magna Carta of 1215 – the result of a conflict between King James and the Barons of England, that the King shall not levy taxes without the authority of Parliament.

“Tax law does not exist in a water tight compartment. Other laws including Administrative law concepts too influence the act of levying taxes” pointed out Suresh R. I. Perera, Attorney-at-Law of KPMG.

The fact that at appropriate instances, Writ jurisdiction of the Court of Appeal could be invoked in matters pertaining to taxation was also revealed at the discussions.

There are many types of Writs - Writ of Mandamus, Writ of Quo Warranto and Writ of Certiorari. Writ of Mandamus: Mandamus is a judicial remedy which is in the form of an order from a superior court to any Government agency, court or public authority to do or forbear from doing any specific act which that body is obliged to do under the law.

The writ of mandamus is issued whenever the public authorities fail to perform the statutory duties confirmed on them.

Writ of Prohibition: The writ of Prohibition is issued by the court exercising the power and authorities from continuing the proceedings as basically such authority has no power or jurisdiction to decide the case.

Writ of Certiorari: This would be enforced against the decisions of the authority exercising judicial or quasi judicial powers. Such powers are exercised when the authorities have failed to exercise the jurisdiction though vested in it or failed to exercise the jurisdiction though vested on him or to correct the apparent error on the face of record or there is violation of the principle of natural justice.

Writ of Quo warranto: This writ is issued when the state challenges the legality of using a public office, or other right that can be held or used under authority of the state.

Writ of procedendo: This writ is issued to send a case from an appellate court to a lower court with an order to proceed to judgment.

Associate Director, Tax and Regulatory, Rifka Ziyard said that Section 137 causes serious concerns as to the validity of the Tax Appeals Commission Act No 23 of 2011 since this Section states that dispute resolution should be as provided for under the chapter XIII of the Inland Revenue Act No 24 of 2017.

She listed out key areas to be taken in to consideration in filing an appeal, the tax payer rights, important internal controls measures etc. Ziyard elaborated as to the 4 stage appellate procedure that prevails in Sri Lanka and the introduction of the “Administration Review” process replacing the CGIR hearing stage.

She said that a tax payer has the right to appeal to the Court of Appeal and the Supreme Court which is the 3rd and 4th stage of the tax appellate procedure, however, it should be on a “question of law”.

Dr. Kanag-Isvaran, outlining ‘what is a question of law’ said, “In the celebrated case of Collettes Ltd v Bank of Ceylon (1982) 2 SLR 514, the Supreme Court was requested by the Court of Appeal, under Article 125 (1) of the Constitution to pronounce upon what constitutes a ‘question of law’, ‘a question of substantive law’, and the tests to adopted to determine same.

Four judges of the then Supreme Court sat to determine it, presided by the Chief Justice. Their Lordships determined, (in six pages), but to mention only a few, that a question of law would also constitute the following: “The proper legal effect of a proved fact, Inferences to be drawn from primary facts found, Mis-directions in law and on facts, taking into account irrelevant facts, improper proper exercise of judicial discretion, absence/sufficiency of evidence to support a finding, Construction of documents, interpretation of statuary provisions and the like. But for a fuller appreciation of the matter one needs to look at the judgment itself.”

The forum on ‘Strategic overview of the Tax Disputes Resolution’ was organised by KPMG at the Movenpick Hotel recently.

The presentations were followed by an interactive session with the audience where many discussed in detail, the changes to the tax appellate procedure.